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Inside the world of business

Plenty of strategising awaits harried Permanent TSB chief

JEREMY MASDING must hope he will not have the record of being the shortest-serving chief executive in Irish banking history. The new head of Permanent TSB is busy devising strategies for the future of the bank ahead of the troika’s blessing of the Government’s future path for it in April.

Masding’s heart would say the bank has a place on the Irish banking pitch, but his head must take account of the considerations being weighed up, along with the poor state of his institution. The bank has been told to consider itself a standalone entity without the comfort blanket that profitable Irish Life provided in the past within Irish Life & Permanent (IL&P).

Among the options on Masding’s desk at head office on St Stephen’s Green is the wind-down of the business. But this is not inevitable. Minister for Finance Michael Noonan said at the latest troika review he didn’t think winding down Permanent TSB was on the cards because of the number of mortgages it had. He saw the bank’s future as either an independent bank or an institution merged with or sold to another.

The Government must finalise a plan for IL&P by the end of April and complete its recapitalisation by June. It is likely to involve some surgery on Permanent TSB’s loan book in line with changes to AIB’s book, and the restructuring of the promissory notes paying for Anglo Irish Bank, which could be used to warehouse bad loans from the two lenders.

Masding had the misfortune of having to tell the market in just his second week in charge last month that Permanent TSB’s loan provisions for 2011 had soared to €1.4 billion due to greater numbers of bad residential mortgages.

It has not been a positive start – and the next few months will involve plenty of strategising for the former Barclays banker.

Job initiatives rely on public engagement

This week saw a series of job creation initiatives launched by the Government. On Thursday, the Taoiseach launched ConnectIreland, an ambitious scheme to create 5,000 foreign direct investment jobs over the next five years by offering ordinary people financial incentives to encourage companies to invest in Ireland.

Thursday also saw the launch of Food Works, a scheme run by Bord Bia, Teagasc and Enterprise Ireland aimed at recruiting a new generation of “food entrepreneurs”. Yesterday, Minister for Enterprise Richard Bruton announced the establishment of a new division within Enterprise Ireland dedicated to targeting “pre-export” companies.

The steady stream of job initiative announcements is to be expected (and will most likely continue). Most were flagged in the Government’s ambitious Action Plan for Jobs announced last month. One notable characteristic of all three is their emphasis on public engagement. All rely on a significant element of public buy-in in order to succeed.

The ConnectIreland initiative – which itself is based on an innovative outsourcing model where responsibility for bringing in jobs is being taken on by a private company – will only work if individuals log on to the website and suggest suitable companies. Similarly, the Food Works programme and the new potential exporters’ division within Enterprise Ireland are both running a series of public meetings around the State at which interested individuals and firms can sign up and get involved.

For companies and individuals, it’s a win-win. All three programmes involve some level of financial reward for successful applicants. The schemes are also a practical example of how government departments and so-called quangos – which are often criticised for being bureaucratic – are attempting to engage with the real economy. To move forward, the onus is now on companies and individuals to engage. The question at this point may not be what your country can do for you, but what you can do for your country.

Scrutiny of Moran surely in public interest

The suggestion by Sinn Féin’s Pearse Doherty the Oireachtas should be allowed to scrutinise the appointment of the new secretary of the Department of Finance, John Moran, is surely correct, irrespective of the arguably unfair way in which he raised the subject in the Dáil.

Moran’s CV, which shows his move to New York in 2003 was for the purpose of winding down the Zurich Capital Markets (ZCM) operation there – after the discovery by the Securities and Exchange Commission that it had been up to no good – also shows the extent to which he was involved in the financial services sector throughout his stellar career.

He was involved in the establishment of ZCM, a $2 billion business in the IFSC, in 1997 and was chief executive of an operation that had offices in Dublin, London, Sydney and New York. All of which attests to his undoubted banking skills. However, failure to restrain reckless behaviour in banking lies at the core of the crisis that has done so much damage to the Irish and other western economies.

The open questioning of Mr Moran by parliamentarians would allow them to probe the extent to which he is a defender or otherwise of power and freedom that has been given to banking, and of his views on how to prevent the sector ever again causing such mayhem.

To hear his views, prior to his appointment, would have been of interest to the public – and in the public interest.

NEXT WEEK:On the results front, the major Irish companies of interest in the run-up to St Patrick's Day will be Aryzta on Monday and Tullow Oil on Wednesday.

Thursday will also see publication of the latest consumer price data.

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